Question

Explain Social Responsibility towards Investors?

Answer 1

Introduction: -Investors provide finance to a company that is considered as the backbone of a business. They are a creditor of the business. The business should fulfill the following responsibility towards investors.

Definitions: - "The personal obligations of the people as they act in their own interest to assure that the rights and legitimate interests of others are not ignored." Defined by.......... (Koontz and O'Donnell)

Responsibilities towards Investors:                     

1. Return on Investment: -Investor invests their money in business and accepts risk factor. This should be adequately recognized by a business. They should get fair returns on investment regularly in the form of interest. The following points should be considered.

• A fair return on investment.
• Safety of investment.
• Steady appreciation of business.

2. Proper Disclosure of Information: -Management should present full and factual information to investors. They should get regular reports, circulars, and statements of profit. The financial performance of a company must be provided correctly so that prospective investors can make the right decisions to invest in the future. This will ensure that their investment is safe.

3. To Maintain Transparency: -Investorsprovide working capital to run a business efficiently. A business should maintain a high degree of transparency in its operation. It is expected from suppliers of funds.

4. Handling Grievances: -A company should handle investor's grievances if any. There should be an effective methodology for this purpose. All queries regarding any other issue must be answered satisfactorily way.

5. Proper Conduct of Meetings: -a company should call meetings of investors regularly to provide information about a business. Proper notices of meetings should be sent. In a period of crisis, investors should be taken into confidence. Factors responsible for failure should be known to investors.

6. To maintain Solvency and prestige: -Business should maintain a sound financial position, solvency, prestige, and goodwill to satisfy investors. A business should take continuous efforts for research innovation and expansion programs.